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In this volatile bear market, it’s essential for investors to have reliable stocks that pay healthy dividends. Many prominent stocks like Apple (NASDAQ:AAPL) have quarterly dividends, but many lesser-known stocks and ETF’s offer monthly dividends. They can pay investors quickly as part of their investment strategy. Many of the monthly dividend stocks under $10 make them very affordable.

This TradingSim article will explain why investors should add stocks with dividend stocks to their portfolios. In addition to mentioning the companies with monthly dividends, this TradingSim article will point out the top 10 highest-yielding monthly dividend stocks.

Monthly dividend stocks have advantages for long-term investors

Dividend stocks that pay off every month can be beneficial for investors that are in the markets for the long run. In one example, an investor can buy 1,000 shares of a $10 stock. So, the dividend payout would be $1.20 per share with a 12% yield. At the end of the year, the dividend payouts would total about $1,268.

The payout of the monthly dividend stock would be different if the same stock had a quarterly dividend. If the stock had 3% of the original investment, the yield would be greatly reduced at 4%. At the end of the year, an investor would have a dividend payment of around $1, 255.

The two dividend stocks have a slight difference. Monthly dividends offer a small advantage. With the above comparison, traders can look at monthly dividend stocks. When compared back-to-back, they still have a significant advantage over quarterly dividend stocks.

What could future returns be on monthly dividend stocks?

Companies that pay monthly dividends like Realty Income( NYSE:O) could produce healthy returns for investors. The real estate investment trust has a 5% yield with a current stock price of about $50. If the dividend and stock price stay in the same range, an investor could accumulate impressive income over time. If Realty Income has an annual yield of 60%, after a year, an investor could already have Realty Income stock worth $87.

After five years of investment in Realty Income, an investor could accumulate $500 in dividend income alone. The principal may reach $835 five years after buying Realty Income stock. After 10 years, an investor could have $17,000 in principal and $10,000 in dividend income. An investor could accumulate even more if dividend yields increase for monthly dividend stocks like Realty Income.

Investors should conduct research before choosing stocks

When choosing stocks, traders shouldn’t just invest in companies that pay monthly dividends recklessly. So, with investments, traders shouldn’t just pick companies that pay monthly dividends that pay a quick payout. Similar to stocks, dividends can fluctuate as well. Just as stock prices can plummet, the highest monthly dividend stocks can, too. In the wake of slumping stocks, dividends can change as quickly as stock prices.

Investors can study trends on TradingSim to determine if and when they choose monthly dividend stocks.

“Across our entire firm, we are engaged with the management teams of our existing portfolio companies to determine how this disruption in the economy may impact their need for liquidity and ultimately the impact to our net investment income.

In addition, Alala III also noted that moving to quarterly dividends will help Capitala adjust to change in the markets. “Moving to quarterly distributions gives us additional time to continue with these assessments. He noted that the change was “as circumstances are changing on a daily basis,” added Alala III.

The instability in the markets has greatly impacted companies that pay monthly dividends. Investors should thoroughly research companies’ earnings reports. They should comb through all the information they can find. Information will help investors choose the best monthly dividend stocks for their portfolios. Traders can study TradingSim charts and monthly dividend calendars. With more research, traders can find the best companies that pay monthly dividends.

Could monthly dividend stocks be in trouble?

While monthly dividend stocks are reliable, the number of dividends may not be as large as expected. The economic downturn may cause companies that pay monthly dividends to reduce their payouts to investors.

Meghan Neenan, managing director and North American head of non-bank financial institutions at Fitch Solutions, noted a slowdown from income generation from business development companies that offer monthly dividends. She asserts that companies may be forced to cut their monthly dividends.

“With non-accruals there is no income being generated by the asset and no revenue flowing to the BDC, which therefore is going to leak in the dividend coverage,” said Neenan.

Robert Dodd, an analyst at Raymond James, believes that the monthly dividend calendar should be cut. He contends that it will help corporations’ bottom line.

“It’s prudent for lots of BDCs to cut dividends this quarter and cut deep enough you don’t have to do it again. But that is asking BDCs to determine what earnings are going to be once this is all over, and that is going to be very hard to estimate,” said Dodd.

Mitchel Penn, an analyst at Janey Capital Markets, notes that even the best monthly dividend stocks may not be immune to cutting dividends.

“There are a lot of good businesses out there that can’t get to their customers, which will likely translate into higher defaults. The higher number of defaults could push many to cut dividends or raise capital,” said Penn.

There is disagreement about whether the best monthly dividend stocks should reduce their yields. The economic downturn may lead to drastic action from the companies and the federal government.

Fed bailout helps REIT’s

Because of the recent economic downturn, real estate investment trusts (REITs) have been hard hit. Many stocks that offer monthly dividends are REITs with holdings in single-tenant real estate. REITs are struggling as millions of tenants can’t pay rent on apartments after suddenly becoming unemployed. The trusts were also in trouble as many of REIT’s held retirement homes. Elderly people living in retirement homes are disproportionately affected by becoming victims of coronavirus.

“The second quarter is going to be pretty ugly for commercial real estate,” said Leon.

As a result, the Federal Reserve noted that it will buy $3 billion in commercial mortgage-backed securities. That bailout should help companies with monthly dividends rebound.

However, Leon believes that “even in an optimistic scenario, which would be a V-shaped recovery sometime in the third quarter, the second quarter is probably going to be negatively impacted.”

Kevin Barker, a senior research analyst at Piper Sandler, noted that the current downturn will impact the real estate industry from now on.

“This is a story that causes a major change to how the market treats mortgage REITs going forward and how they view leverage and funding. We might have a much different industry six months from now than we do today,” said Barker.

Best monthly dividend ETF’s rise on hopes of economic recovery

Some ETF’s (exchange traded funds) that offer monthly dividends have seen gains lately. They rose after Wall Street hopes that the economy will recover soon as states slowly re-open.

ETF’s that have monthly dividends include SPDR Dow Jones Industrial Average ETF(NYSEARCA:DIA). The ETF offers a 2.1% yield and saw a slight increase. The SPDR Dow Jones Industrial Average ETF is one of many that could be seen as relatively safe investments once the economy recovers. Brooke May, managing partner at Evans May Wealth, is cautiously optimistic. She believes that stocks and ETF’s will recover as the economy slowly comes back to life.

“The market has already priced in the economic data that we’re seeing currently,” said May.

“As states start to re-open and businesses are able to see revenues again – and measures are taken to contain the virus so we don’t see a resurgence – that will be seen as good news,” added May.

Top 10 Best Monthly Dividend Stocks

Despite the economic volatility, many of the companies that pay monthly dividends are low-risk investments like value stocks. However, the monthly dividend stocks are predominately in industries like real estate. Here are 10 of the corporations that offer the highest monthly dividends.

1. Prospect Capital Corporation

Like many monthly dividend stocks, Prospect Capital (NASDAQ:PSEC) is a low-risk investment. Prospect Capital has a 16.53% yield. That makes it one of the highest monthly dividend stocks. The corporation also has an annual dividend of $0.72. Prospect Capital is a “business development company”. The corporation mostly gives loans to companies in the energy and equity real estate investment trusts.

Some of the corporations that Prospect Capital invests in include Ark-a-Lex Wireline Services, an oil field services company. The company also has holdings in EXC Holdings III, an electronics business.

PSEC stock the week of March 19

As a business development company, Prospect Capital must pay out the money it earns through dividends to investors.

The corporation has a low P/E (price-to-earnings) ratio of 11. As a result, Prospect Capital is rated as undervalued by financial analysts. The company’s stock recently soared 10% over the last few weeks.

Prospect Capital profits up despite downturn

The stock rose after investors bought a high volume of shares earlier this month. Prospect Capital Corporation had $0.37 earnings per share over the last year. The company’s chief operating officer, Michael Grier Eliasek, noted Prospect Capital’s success in its last earnings report.

“Our scale business with over $6 billion of assets and undrawn credit continues to deliver solid performance. Our experienced team consists of approximately 100 professionals, which represents one of the largest middle market credit groups in the industry,” said Grier Eliasek.

“With our scale, longevity, experience and deep bench, we continue to focus on a diversified investment strategy”, said Grier Eliasek.

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Monthly dividend stocks like Prospect Capital may reduce its yield because of the COVID-19 crisis. However, Prospect Capital still had an impressive net income of $313 million in 2019. Investors looking for one of the best monthly dividend stocks can choose Prospect Capital.

2. AGNC Investment

AGNC (NYSE:AGNC) is a high-yield monthly dividend stock that offers a still-high 12% yield after cutting its dividend by 25%. The company’s monthly dividend will be reduced to $0.12 per share. AGNC asserted that the reduction will help the company and investors in the long run.

The corporation said that the dividend reduction “provides the company greater flexibility to take advantage of attractive investment opportunities presented by the current environment. “

AGNC said that the dividend cut will be beneficial “to reinvest earnings in excess of our dividend back into our business over time.”

The trust builds revenue through monthly dividends and net asset value creation as well. AGNC is a REIT that uses borrowed funds to buy mortgage-backed securities.

AGNC stock

The corporation’s president Gary D. Kain noted the success of the company that pays monthly dividend in its Q4 2019 earnings report.

“Our economic return of 9.6% in the fourth quarter represents AGNC’s best quarter since the second quarter of 2019 and drove a total economic return of 18.7% for the year. Looking ahead, we believe AGNC remains extremely well-positioned to continue to generate attractive risk-adjusted returns as a more benign interest rate environment,” said Kain.

Analysts believe AGNC will weather economic storm

While the company did well at the beginning of the year, March has been a different story. ANGC was greatly affected by the COVID-19 pandemic after-shocks. The corporation’s book value plummeted 23% to $13.60 a share in the last quarter.

Even though REIT’s are tumbling in this volatile stock market, financial analysts say that the stock is still a buy. Bank of America analysts say that the Fed buying troubled mortgage-backed securities like AGNC will help the company recover quickly from the current economic downturn.

“The Federal Reserve took unprecedented actions to support the Agency MBS and U.S. Treasury markets, as well as many other asset classes within the broader fixed income complex”, said AGNC in a statement.

“These Fed initiatives, together with significant actions taken by the Company to manage risk, allowed AGNC to close the quarter with leverage and liquidity at normal operating levels,” said AGNC.

With a strong dividend payout and help from the Fed, AGNC is a solid monthly dividend stock for investors.

3. Cross Timbers Royalty Trust

Cross Timbers Royalty Trust (NYSE:CRT) is a contrast from other companies that have monthly dividends. This corporation has investments in oil and gas properties. The properties are mostly in the oil-rich states of Texas, Oklahoma, and New Mexico. Cross Timbers has oil properties in Mexico as well.

Cross Timbers offers a healthy 20.99% yield. However, that could change with the oil industry in freefall.

The oil industry has suffered from a double whammy of bad news. The Russia-Saudi Arabia battle knocked oil prices down. In addition, with stay-at-home orders, fewer people are driving. That decline is driving down US oil demand.

Cross Royal Timber Trust could recover if oil demand rebounds

Michael Hsueh, Citi analyst, noted that companies like Cross Timber could recover if a demand in oil increases later in the year.

“We would need to see a recovery in oil product demand in the end user markets,” said Hsueh in a note to clients.

“For example motorists, airlines and manufacturers as countries cautiously relax epidemic mitigation efforts possibly as soon as May, but more so in June,” added Hsueh.

“We would need to see a normalization of oil inventory from abnormally high levels,” said Hsueh.

Hsueh also believes that oil refiners have to reduce inventory to increase demand.

“Oil refiners will choose to drawdown inventory in the first instance, before resuming a normal pace of buying,” he added.

Cross Timber Royalty Trust stock

Cross Timber Royalty Trust is a small-cap company with a $69 million capitalization. The corporation also had $5 million in earnings in 2019. Even though the oil industry is reeling from volatility, Cross Timber is an overall healthy monthly dividend stock for investors.

4. Horizon Technology Finance

Horizon Technology Finance( NASDAQ:HRZN) is another company that pays a monthly dividend. Its dividend is 10% This corporation is business development company that invests in tech, life science, and healthcare information businesses.

Horizon Technology Finance had mixed results despite the recent economic downturn. Because the corporation supports in-demand fields like tech, Horizon’s net investment income in Q1 2020 increased to $4.3 million. That’s a slight jump from $3.2 million from the same period in 2019.

While Horizon had revenue of $10.1 million in Q1 2020, there was disappointing news as well from the corporation. The COVID-19 -caused downturn led to a Losses from Q1 totaled $708,000.

“In this challenging economic environment, we are focused on continuing to manage our existing portfolio of investments, maintain a strong balance sheet and prudently originate new investments,” said Pomeroy, Jr.

Pomeroy also pledged to support the corporations in its portfolios during the coronavirus pandemic.

“We are working closely with the management teams and investors of our portfolio companies to help them through this period of great uncertainty, especially those companies that have been most impacted by COVID-19. We believe our current liquidity position and strong balance sheet provide us with the capacity to manage through this unprecedented environment,” said Pomeroy, Jr.

Horizon commits to monthly dividend despite economic volatility

Horizon is one of the highest monthly dividend stocks and intends to stay that way. Pomeroy vowed that Horizon would continue to distribute its monthly dividend.

“While our outlook is cautious, we are maintaining our current monthly distribution level of $0.10 per share based upon our outlook and our spillover income. Looking ahead, we will continue to closely monitor the environment, our portfolio companies and our credit quality, while we selectively invest in opportunities that meet our underwriting criteria, in order to continue to deliver value to our shareholders,” said Pomeroy.

Horizon Technology Finance Stock

5. Main Street Capital

Main Street Capital is another business development company with an impressive 8% yield. The corporation loans money to small corporations with sales under $150 million. In its Q4 2019 earnings report, chief executive officer Dwayne L. Hyzak, noted that the net investment income exceeded its monthly dividends.

“We are pleased that for the fourth quarter and full year, we again generated distributable net investment income or DNII per share in excess of our regular monthly dividends, exceeding the monthly dividends paid in the fourth quarter by approximately 7% and for the full year by approximately 10%”, said Hyzak.

Financial analysts says Main Street Capital is a buy

Despite the volatility of the stock market, financial experts are still bullish on Main Street Capital stock. Financial expert Mark Skousen believes that Main Street is one of the best monthly dividend stocks.

“MAIN issued an important announcement, stating that the company insiders are buying stock, and believe their diversified portfolio and the company’s limited use of debt will serve them well to survive this crisis,” said Skousen.

Main Street Capital stock

Skousen also noted that he recently spoke to Main Street Capital founder Vince Foster and had a reason for optimism. He said that Foster was adamant that Main Street Capital would maintain its monthly dividend.

Main Street Capital is sure to be a top monthly investment stock with its strong dividend yield.

6. Shaw Communications

Shaw Communications (NYSE: SJR) is a Canadian telecommunications company that has a nice dividend for investors. It’s the only telecom monthly dividend stock with a 4% yield.

Shaw lays off workers during economic slump

“We value the hard work and expertise of all our employees in helping deliver connectivity to our customers across the country. Unfortunately, these changes are necessary until our business activities resume to more normal levels,” said McAleese in a statement.

“With our gratitude, we will be providing financial support to affected employees beyond applicable government programs, and we look forward to welcoming them back when business conditions improve,” added McAleese.

Shaw has strong Q2 earnings report

Despite the layoffs, Shaw still had a positive Q2 2020 earnings report.

Financial experts see Shaw as a strong buy

In the current environment, we believe Shaw is well-positioned to be a “safe haven” for investors”.

He added that Shaw has an “attractive dividend yield, reasonable exposure to strong demand for Internet services, multi-year growth runway for wireless given under-indexed market share and a market position within the more price-sensitive, lower end of the telecom market that could benefit during a recession.”

7. Gladstone Commerical Corporation

There is uncertainty about real estate with many tenants currently unable to pay rent. Despite that, Gladstone Commercial had a positive Q1 2020 earnings report. The corporation reported $33.6 million in operating revenue, an increase from the last quarter. This surpasses the $28.14 million revenue from the same time a year ago.

“Regarding the common stock dividend, we did increase it in the first quarter, and while the increase was small, we have also announced that we are leaving the dividend as is in the second quarter. We have not cut or suspended the dividend since our IPO in 2003. Our stock closed yesterday at $16.05. The distribution yield on the stock is currently 9.4%. Many REITs are trading at much lower dividend yields,” said Sodo.

With a healthy payout and strong earnings report, Gladstone Commercial is a solid company that pays monthly dividends.

8. Solar Senior Capital

Solar Senior Capital (NASDAQ:SUNS) is a business development company with an 8% yield. The corporation invests in companies with revenue of at least $50 million. During its last earnings report, Solar Senior had a positive outcome because of its diversification.

Solar Senior stock

“SUNS carry a dividend yield of 7.8% which represents a significantly higher rate of return than the 5.6% implied yield of the S&P/LSTA Leveraged Loan 100 Index. Given the overall credit quality of SUNS diversified portfolio, our differentiated origination engines, and our disciplined investment philosophy we believe SUNS continues to represent an attractive investment on both a relative and absolute value basis,” noted Solar Senior Capital.

Economic Stimulus helps Solar Senior

In addition to the positive earnings report, Solar Senior has been helped by the recent economic stimulus money that has been sent to businesses. In a letter to investors, Solar Senior noted that money will help the corporation remain a company that pays a monthly dividend.

“The $2 trillion economic stimulus package recently passed by Congress and signed into law by the President is designed to provide financial assistance to small businesses. We expect this assistance to reach many of the businesses to which we provide financing,” said Solar Senior.

“Solar Senior entered this downturn with what we believe to be a defensively positioned, high-quality portfolio constructed in anticipation of a market disruption,” added the company.

A diversified portfolio and government help make Solar Senior one of the best monthly dividend stocks.

9. Whitestone REIT

Whitestone REIT (NYSE:WSR) is a real estate investment trust that acquires “e-commerce resistant” neighborhood and lifestyle properties. The company is one of the highest monthly dividend stocks with an 8% yield. In its last earnings report, the company that pays a monthly dividend showed it was making progress. Jim Mastandrea, chairman and CEO of Whitestone, commented on the growth.

“We continued to show strong underlying fundamentals in 2019 as we grew same- store NOI( net operating income) by 4.7% in the fourth quarter and 2.4% for the full year,” said Mastandrea.

“We also made significant progress increasing rental rates, realizing significant income from equity investment as a result of gains on Pillarstone OP asset dispositions, scaling our G&A [general and administrative expenses] and making progress on our capital structure, ” said Mastandrea.

Whitestone REIT

“We are pleased with our acquisition of Las Colinas Village in Irving, Texas in the fourth quarter, and look forward to growing the portfolio and cash flow in the years ahead. Our high-quality properties in high growth markets coupled with our ‘e-commerce resistant’, service-based business model, will continue to result in long-term value creation for all our stakeholders,” commented Mastandrea.

“This is evidenced in our long term, industry-leading Total Shareholder Returns, which rank us number one of the U.S. public shopping center REITs over a three-year timeframe, and number two over a five-year timeframe,” concluded Mastandrea.

Whitestone monthly dividend reduced, but still strong

In the wake of the economic downturn, Whitestone has reduced its monthly dividend. It’s been cut from $0.095 to $0.035, a 64% drop. Despite the reduction, Whitestone is still a reliable monthly dividend stock.

10. STAG Industrial

In contrast to the e-commerce resistance of Whitestone REIT, STAG Industrial is having success because of e-commerce. It’s yet another REIT monthly dividend stock that investors can choose. STAG has a 6% monthly yield.

STAG purchases single-tenant properties. The corporation isn’t acquiring any new properties because of the coronavirus virus. However, the corporation has done well with its purchases of warehouses. Many warehouses are being used for e-commerce, especially in this time of quarantine. Some of the company’s clients include Amazon (NASDAQ:AMZN) and FedEx (NYSE: FDX).

“Same-store cash NOI ( net operating income) grew 2.4% during 2019 exceeding the high end of our revised guidance. Same-store cash NOI growth was driven by our retention rate of 76.7% and cash releasing spreads of 10%,” said STAG in a statement.

With diversification and growth in e-commerce, STAG Industrials is one of the best monthly dividend stocks.

Monthly dividend stocks important for investors wanting steady, passive income

The highest monthly dividend stocks offer many options for investors. If investors want to choose stocks that have some stability in this volatile economic time. If traders want to invest in stocks or ETF’s with a slow, but steady source of income, monthly dividend stocks are a good choice. Investors that want to passively invest in their spare time, monthly dividend stocks can be a good option.

When investors want to follow a monthly dividend calendar, they can follow the calendar to reinvest dividends into buying more shares of a company.

Investors must conduct research and analysis to pick the highest monthly dividend stocks. With TradingSim’s charts, investors can test their trading strategies to find the best monthly dividend stocks for their portfolios.

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Ella Vincent has been a financial writer for years. She attended the University of Illinois at Chicago, where she studied both journalism and finance. Ella has written for renowned finance site Motley Fool where she offered stock analysis to investors. She also covered the US stock market for IG Group, a UK-based stock and foreign currency trading corporation. She became interested in the stock market ever since she saw financial advisor Mellody Hobson. In her spare time, Ella likes to attend concerts and watch basketball with family and friends. Follow her @bookgirlchicago.